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- The bargaining power of buyers
When any of these factors change, companies may have to respond by changing their strategies. For
example, because buyers are consuming fewer soft drinks these days, companies such as Coke and Pepsi
have had to develop new, substitute offerings such as vitamin water and sports drinks. However, other
companies such as Dannon or Nestlé may also be potential entrants in the flavored water market. When
you select a hamburger fast-food chain, you also had the option of substitutes such as getting food at the
grocery or going to a pizza place. When computers entered the market, they were a substitute for
typewriters. Most students may not have ever used a typewriter, but some consumers still use typewriters
for forms and letters.
Figure 2.8
When personal computers were first invented, they were a serious threat to typewriter makers such as Smith
Corona.
Source: Flickr.
Suppliers, the companies that supply ingredients as well as packaging materials to other companies, must
also be considered. If a company cannot get the supplies it needs, it’s in trouble. Also, sometimes
suppliers see how lucrative their customers’ markets are and decide to enter them. Buyers, who are the
focus of marketing and strategic plans, must also be considered because they have bargaining power and
must be satisfied. If a buyer is large enough, and doesn’t purchase a product or service, it can affect a
selling company’s performance. Walmart, for instance, is a buyer with a great deal of bargaining power.
Firms that do business with Walmart must be prepared to make concessions to them if they want their
products on the company’s store shelves.